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OUTSIDE MARKET DEVELOPMENTS: While the US Dollar remains within striking distance of its recent highs, the Dollar action overnight does not appear to be the primary reason behind the slide in gold and silver prices. Apparently softer than expected US Consumer Confidence readings and the sharp downside push in global equities on Tuesday undermined global recovery views and that in turn has prompted selling in a host of physical commodity markets like gold and silver. It would also not seem like debt concerns in the Euro zone are behind the overnight weakness in the precious metals markets. With a US new home sales report due out later this morning and the outlook for the recovery seemingly downgraded recently the importance of regularly scheduled US data flows looks to have expanded. Some bulls might hope for some support off the US Fed Chairman testimony at mid morning, as the Chairman is expected to reiterate the need to leave US interest rates at low levels for an extended period of time. The markets will also see a second leg of US Treasury auctions around mid session with $42 billion in 5 Year notes being offered for sale.
GOLD MARKET FUNDAMENTALS: There appears to be a general macro economic let down being embraced in gold and other economically sensitive commodity markets. While the Consumer Confidence readings from the US aren’t typically seen as a top tier economic report, the market has apparently taken those readings to heart and it could take something very positive from the new home sales report this morning just to temper the fear of a long slow recovery process. After the early weakness in gold prices today, one could suggest that disappointment over potential Chinese interest for IMF gold supply added into the negative price tilt overnight, but the Chinese have already signaled that current gold price levels were unattractive to them. However, there are press reports overnight suggesting that India might be a buyer for the IMF gold supply and given the size of the IMF gold sale, it would not seem like the physical sale issues are a primary bear force for the gold trade. It would almost seem as if the gold trade is fearful of the US Fed Chairman testimony later today and therefore traders might expect to see some mid morning volatility in gold prices around that testimony. With gold and equities seemingly tightening their relationship recently, gold traders will probably continue to take a large measure of guidance from the US stock market.
SILVER MARKET FUNDAMENTALS: The silver market remains under pressure in the early going today with the silver trade suggesting that broad based physical commodity market weakness was behind the slide in prices yesterday. As in the gold market, silver was disappointed with slack US numbers and also with the sharp declines in US equities. With noted weakness in industrial commodities like copper, the silver market seems to be encountering financial and industrial based selling pressure. Given the drift back a toward classic physical commodity market fundamental focus in silver, that could make the new home sales report and the action in the US equity markets this morning even more critical to the silver trade. The bear camp might even play up a minor trend of builds in daily silver exchange stocks as a negative but in the short term, the concern of slackening demand seems to be more important than minor supply side issues.
PLATINUM: There is no respect for the recovery and that leaves the door open for more liquidation selling in the platinum market. With an early failure back below the $1,500 level this morning, it is clear that some classic technical pressure is set to combine with a poor fundamental picture. However, we would not rule out a respect for support down at $1,489 in the face of Bernanke testimony this morning but only if the new home sales figures manage to stay in positive territory.
Precious Metals Market Commentary – 2010.02.24
by Dave Hightower on February 24, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
OUTSIDE MARKET DEVELOPMENTS: While the US Dollar remains within striking distance of its recent highs, the Dollar action overnight does not appear to be the primary reason behind the slide in gold and silver prices. Apparently softer than expected US Consumer Confidence readings and the sharp downside push in global equities on Tuesday undermined global recovery views and that in turn has prompted selling in a host of physical commodity markets like gold and silver. It would also not seem like debt concerns in the Euro zone are behind the overnight weakness in the precious metals markets. With a US new home sales report due out later this morning and the outlook for the recovery seemingly downgraded recently the importance of regularly scheduled US data flows looks to have expanded. Some bulls might hope for some support off the US Fed Chairman testimony at mid morning, as the Chairman is expected to reiterate the need to leave US interest rates at low levels for an extended period of time. The markets will also see a second leg of US Treasury auctions around mid session with $42 billion in 5 Year notes being offered for sale.
GOLD MARKET FUNDAMENTALS: There appears to be a general macro economic let down being embraced in gold and other economically sensitive commodity markets. While the Consumer Confidence readings from the US aren’t typically seen as a top tier economic report, the market has apparently taken those readings to heart and it could take something very positive from the new home sales report this morning just to temper the fear of a long slow recovery process. After the early weakness in gold prices today, one could suggest that disappointment over potential Chinese interest for IMF gold supply added into the negative price tilt overnight, but the Chinese have already signaled that current gold price levels were unattractive to them. However, there are press reports overnight suggesting that India might be a buyer for the IMF gold supply and given the size of the IMF gold sale, it would not seem like the physical sale issues are a primary bear force for the gold trade. It would almost seem as if the gold trade is fearful of the US Fed Chairman testimony later today and therefore traders might expect to see some mid morning volatility in gold prices around that testimony. With gold and equities seemingly tightening their relationship recently, gold traders will probably continue to take a large measure of guidance from the US stock market.
SILVER MARKET FUNDAMENTALS: The silver market remains under pressure in the early going today with the silver trade suggesting that broad based physical commodity market weakness was behind the slide in prices yesterday. As in the gold market, silver was disappointed with slack US numbers and also with the sharp declines in US equities. With noted weakness in industrial commodities like copper, the silver market seems to be encountering financial and industrial based selling pressure. Given the drift back a toward classic physical commodity market fundamental focus in silver, that could make the new home sales report and the action in the US equity markets this morning even more critical to the silver trade. The bear camp might even play up a minor trend of builds in daily silver exchange stocks as a negative but in the short term, the concern of slackening demand seems to be more important than minor supply side issues.
PLATINUM: There is no respect for the recovery and that leaves the door open for more liquidation selling in the platinum market. With an early failure back below the $1,500 level this morning, it is clear that some classic technical pressure is set to combine with a poor fundamental picture. However, we would not rule out a respect for support down at $1,489 in the face of Bernanke testimony this morning but only if the new home sales figures manage to stay in positive territory.
Tags: Gold, Metals, Platinum, Silver
About Dave Hightower